WARSAW — The U.S. Department of Justice has accused Zimmer Biomet of breaching a deferred prosecution deal from 2012.
According to a status report on complianceweek.com, dated June 6, Biomet entered into the agreement with the Department of Justice on March 26, 2012. This agreement pertained to roughly $1.5 million in bribes the Warsaw-based company allegedly agreed to pay in China and Latin America, which was a violation of the Foreign Corrupt Practices Act.
Biomet was one of three companies named in the investigation, the other two being Johnson & Johnson and Smith & Nephew Inc. According to a 2012 news release at the Department of Justice website, Biomet “made various, improper payments” to locations in Argentina, Brazil and China to “secure lucrative business with hospitals.”
Payments made were incorrectly recorded at the end of each fiscal year, 2000-2008, to conceal their true purposes. The original news release from 2012 can be viewed here.
Under the deferred prosecution agreement, the government agreed to defer prosecution if Biomet complied with certain requirements, including implementing and maintaining a compliance and ethics program to detect and prevent any FCPA violations. An independent compliance monitor would then review the program.
The company also had to pay a $17.28 million criminal penalty.
The status report noted the agreement was for a three-year term, which could be extended by an additional year if a violation was discovered. The DPA was extended and, on March 18, a status report was filed stating the government had reason to believe Biomet had, indeed, violated the FCPA based on “conduct in Mexico and Brazil.” Biomet had also failed to implement and maintain the required compliance program.